4 Simple Strategies To Lower the Cost of Your Homeowners Insurance

The joys of becoming a homeowner come with a checklist as the closing date approaches—and one of the requirements by mortgage lenders is to ensure you have home insurance coverage.

Insurance coverage protects your investment and gives you money to make any necessary repairs if your home is damaged or destroyed by a covered event such as a fire, storm, or tornado.

Coverage can be costly depending on what needs to be insured. While rates vary by state, the average cost of homeowners insurance in the U.S. is about $1,915 a year for $300,000 worth of dwelling coverage, according to NerdWallet.

The company also compiled the average annual rates for some of the largest homeowners insurance companies in the U.S. Not all carriers may offer coverage in your state.

With the average annual cost of homeowners insurance costing over $2,000, there are ways to save without sacrificing coverage.

1. Shop around

It’s best to get quotes from different carriers because each may offer different rates. You can even go online and get instant quotes to give you an idea of what it will cost you. The process can be overwhelming, but if you’re working with an insurance agent, they’ll be able to do this for you and explain the best policy that you might not be considering.

Shmuel Shayowitz, president at Approved Funding in Teaneck, NJ, explains to Realtor.com® that insurance brokers are used to seeing the numbers, but “this might be your first time seeing a homeowners insurance binder and policy.”

Various factors go into an insurance quote. For example, the age of your roof, when your home was built, or its location.

“By comparing rates from multiple insurers, homeowners can not only save money, but also ensure they’re getting coverage tailored to their specific needs,” adds Rick Valeri, sales manager at Bamboo Insurance in Charlotte, NC. “The savings from a thorough comparison could easily amount to hundreds of dollars annually, making it a smart investment of your time.”

It’s best to get quotes from different carriers because each may offer different rates.(Getty Images)

2. Increase your deductible

One of the easiest ways to lower your home insurance rate is to have a higher deductible. You will pay more out of pocket if you file a claim, but the lower payments might save you over the course of years.

This course of action isn’t for everyone.

“It’s important to review your financial situation before making that decision. Also, ask about premium discounts,” cautions Valeri.

3. Bundle policies

If you have home and auto insurance, many times if you get it from the same company you’ll get a discount. This is called bundling policies—a convenient way to save.

Policies that can be bundled include auto, home, and renters insurance. Aside from saving money, you have to deal with only one company when making payments or using its services.

The downside to bundling polices is, over time, the insurer might raise premiums. At that point, you’ll find yourself having to shop around once again.

4. Make home improvements

Making improvements to your home can save you money, but you will want to check with your insurance carrier to confirm which improvements qualify for discounts.

Some of those improvements include updating old wiring, upgrading your roof, or adding storm-resistant windows.

These are expensive improvements, so check with your insurance company to see if it will be worth making the investment.

You should also check to see if your carrier will offer a discount if you install a home security system or smart home device.

Smart savings

It’s best to set a budget to determine how much you can afford and how much coverage you need.

“Start with the lowest requirement by the lender—get that price, then start adding upgrades from there and decide with each add-on if it’s worth the expense at this point,” says Shayowitz.

Remember to carve into your budget any unexpected expenses.

“Insurance can be changed at any point after closing. There is no reason to feel locked in or stuck with a policy just because you got it at closing,” says Shayowitz. “A homeowner will be refunded any pro-rated portion of their insurance if it’s canceled with an unused premium.”

For this and related articles, please visit Realtor.com